915862--12/12/2006--PANTRY

related topics

{debt, indebtedness, cash}

{financial, litigation, operation}

{stock, price, share}

{cost, regulation, environmental}

{condition, economic, financial}

{customer, product, revenue}

{competitive, industry, competition}

{personnel, key, retain}

{acquisition, growth, future}

{control, financial, internal}

{provision, law, control}

Risks Related to Our Industry The convenience store industry is highly competitive and impacted by new entrants. Volatility of wholesale petroleum costs could impact our operating results. Wholesale cost increases of tobacco products could impact our operating results. Changes in consumer behavior, travel and tourism could impact our business. Risks Related to Our Business Unfavorable weather conditions or other trends or developments in the southeastern United States could adversely affect our business. Inability to identify, acquire and integrate new stores could adversely affect our ability to grow our business. Our substantial indebtedness could negatively impact our financial health. Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional debt. This could further increase the risks associated with our substantial leverage. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. If we do not comply with the covenants in our senior credit facility and the indenture governing our senior subordinated notes or otherwise default under them or the indenture governing our convertible notes, we may not have the funds necessary to pay all of our indebtedness that could become due. We are subject to state and federal environmental and other regulations. We depend on one principal supplier for the majority of our merchandise. We depend on two principal suppliers for the majority of our gasoline. Because we depend on our senior management s experience and knowledge of our industry, we would be adversely affected if senior management left The Pantry. Pending litigation could adversely affect our financial condition and results of operations. Litigation and publicity concerning food quality, health and other related issues could result in significant liabilities or litigation costs and cause consumers to avoid our convenience stores. Pending SEC matters could adversely affect us. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock. Future sales of additional shares into the market may depress the market price of our common stock. Any issuance of shares of our common stock in the future could have a dilutive effect on your investment. The market price for our common stock has been and may in the future be volatile, which could cause the value of your investment to decline. Our charter includes provisions that may have the effect of preventing or hindering a change in control and adversely affecting the market price of our common stock.

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915862--12/12/2006--PANTRY_INC